Category: Economics

I’m guessing there will be no consequences for the students who miss a big chunk of their semester protesting in the streets.

 

“A lot of us are already in debt and we haven’t graduated yet. A lot of my friends, even though they work 20 hours a week, that is not enough to cover their expenses,” said Rick, a 19-year-old psychology major. “A lot of us can’t even afford to get sick.”

Hey, Rick, join the club. You’re not the first generation of college students who had to go into debt. But here’s the thing: You made a choice to go to college. You knew what the tuition was. You knew you’d have to take loans. But you made a value-judgment weighing the cost versus the benefits. (At least I hope you did and you didn’t go to college because you were aimless and lacking in direction or you just wanted to extend your adolescence.)

You could have taken a job or enlisted, saved up money, gone to school later. 20 hours per week? I know people who worked 40 hours per week or more on top of a full schedule. Sure, there’s isn’t time for partying (or street protests), but for them the hard work and sacrifice will pay off. Or you could have looked for a full-time job and gone part-time at night. It might take you longer to get that degree, but you’d have the satisfaction of knowing you didn’t have to take a handout to get it.

Bottom line, Rick, is that life’s not fair. There will always be somebody with a bigger salary, a better car, a nicer job. So what? Get over it. Stop worrying about what the other guy’s got and start making your own way. Think of anyone you know who’s a success (someone who worked for it, not had it handed to them in an inheritance or they cheated their way into it). I’ll bet they worked hard, didn’t complain too much about what the other had that he didn’t and took advantage of every opportunity. That’s the American dream, baby, not sleeping in a makeshift hobo camp, complete with WiFi and catered smoked salmon and cream cheese bagels for breakfast (from actual news reports).

The thing is most of the rest of America agrees with one key aspect of your protest: We, too, are sick of politicians in bed with corporate executives who get special access to influence and our money. But the difference is that most of us want to fix it with less government, not more. More government, in the form of bailouts and special industry regulations and arcane tax codes, is what got us into this mess.

Hopefully, someday you’ll realize all this, when you have your own family and mortgage and job that occupy your time. When that time comes, let’s have a beer and I’ll show you around the Tea Party rally where you can meet the rest of us. The 99% you so fondly speak of.

Photo by franzudahhh – http://flic.kr/p/asX7pR

Update: Thanks to a commenter for pointing out an error. I wrote oil production and consumption in terms of “billions” of barrels, not “millions”. However, the underlying ratios were correct as is my point. And the president is still wrong.

The President was at a town hall meeting last week where he received a question about rising gas prices. His answer was full of misdirection on oil production, the causes of gas prices and outright snark at people who find it necessary to buy big vehicles for their big families. It was, in effect, another “bitterly clinging to their guns and religions” moment.

So the questioner asked him what Obama was going to do about high gas prices, and then the President gave him an impromptu supply-and-demand lesson that sounded good, but was—unfortunately and predictably—wrong. He said that a few years ago, when the economy was going great and individuals and industry were buying lots of oil, the high demand drove oil prices up. Then when the global economy tanked and demand dropped, prices dropped. And now that the economy is recovering—he claims—the prices are going up again because demand is up.

For one thing, oil prices are not driven primarily by supply and demand. Oil prices are driven by oil production, which is controlled by the consortium of oil-producing countries known as OPEC.

That sounds like a nice pat lesson from a freshman economics textbook. Unfortunately, it’s completely inadequate. For one thing, oil prices are not driven primarily by supply and demand. Oil prices are driven by oil production, which is controlled by the consortium of oil-producing countries known as OPEC. They decide how much oil will be produced and thus how much we must be willing to pay for it. For another thing, oil prices are also affected by politics, like, say, our little adventure in Libya, attacking Quaddafi on behalf of the al Quaeda rebels seeking to overthrow him.

Rather than higher oil prices being simply an indication of a recovering economy, it’s also an indicator of political turmoil and decisions by a group of non-democratic nations with varying levels of animosity toward the US.

Math is hard

At this point, Obama isn’t done showing what is either appalling ignorance or an appalling cynicism toward the intelligence of his audience.

We have about 2, maybe 3 percent of the world’s proven oil reserves; we use 25 percent of the world’s oil.  So think about it.  Even if we doubled the amount of oil that we produce, we’d still be short by a factor of five.

It seems reasonable at first, but look deeper and you see that he’s comparing apples and oranges. The United States has 2 to 3 percent of the world’s oil reserves. That’s a static number. That is not production, or supply, a dynamic number. Our consumption of 25 percent of oil is dynamic. His comparison makes it seem like the US produces a minuscule amount of the world’s oil.

In fact, the the United States is the third-largest producer of oil behind Russia and Saudi Arabia. (We produce 8.3 millions of barrels/day; Russia: 9.8 million bbl/day; Saudia Arabia: 11 million bbl/day.) Meanwhile, our oil consumption is 18 million barrels of oil per day.

If we doubled our oil production, we wouldn’t be short by a factor of five as he claimed. We’d actually break even and be producing all of the oil we need and would no longer be beholden to the OPEC oil cartel.

Consider that. If we doubled our oil production, we wouldn’t be short by a factor of five as he claimed. We’d actually break even and be producing all of the oil we need and would no longer be beholden to the OPEC oil cartel. Is the President lying, is he stupid, or is he cynically banking on a lack of education on the part of his audience?

Bitterly clinging to our gas-guzzlers

But he’s still not done. He then goes on to talk about increasing efficiency in vehicles. He takes to task the people who drive fuel-inefficient SUVs and other large vehicles.

 

“If you’re complaining about the price of gas and only getting eight miles a gallon… [inaudible comment from the crowd] … you may have a big family, but it’s probably not that big. How many kids you have? [inaudible] Ten kids, you say? Ten kids? [snarky smirk on his face] Then you definitely need a hybrid van then.”

It’s not like big families are out there driving gas-guzzling, giant vehicles because we want them. We drive these vehicles because none of the automakers have been producing vehicles for us over the past 20 years. When I was a kid, families bought station wagons and just piled in as many kids would fit. Now, not only do we need to be belted in, we need massive car seats that ensure that you can’t fit more than 2 kids under 12 into an average sedan. There are essentially no more station wagons and once you get up to five kids, you’re looking at either a full-size van or a full-size SUV.

And in my general experience, number of children is inversely proportional to the amount disposable income available for the purchase of new hybrid vans, if they even made one that seats 10. (Do they?)

It’s just another out of touch pandering moment by Obama. He ends by suggesting that his interlocutor think about a trade-in for his eight-mile-per-gallon gas guzzler. Can we get a trade-in on our ideology-guzzling president instead?